Ratios/Profit Margin

Ratios and Profit Margin Insert name Course code Instructor’s name Name of the university DISCUSSION 1: RATIOS Firm’s performance can be predicted by use of financial ratios. When calculating financial ratios, information is generated from company’s financial statements…

Introduction

In special cases, ratio analysis is done to help in predicting possible future bankruptcy of the company. The main financial ratios used in most cases include: Liquidity ratio, financial leverage ratio, asset turnover rations, dividend policy ratios and profitability rations. Generally, these ratios are useful indicators of a firm's performance and the prevailing financial situation. Do ratio tells the whole story? To some extents, financial ratios play an important role by providing an overview of accounting and financial position of the company. However, ratios do not give the overall picture of the organization. This is because it depends on historical figures which are bound to change due to certain seasonal factors. In the same note, ratios are highly subjected to manipulation and this affects credibility of the outcome. This implies that adjustments can be made on earnings to predict higher returns to the company. Based on this view, it means that ratios may mislead and should be treated with a lot of caution when interpreting financial position of the company. Liquidity Ratios Liquidity ratios are used to determine the ability of the firm to accomplish short term financial needs. It mainly applies to parties who extend short term credit facilities to the company. Two main liquidity ratios include: Current Ratio and Quick ratios. ...

Therefore management calculates and uses financial ratios to identify the performance gap of the firm against its own past performances as well as against the performance of competing firms in the industry (Johnson, & Scholes 2001). In addition to this, management uses to analyse the financial performance of the firm against the average financial ratios of the firms operating in the industry as…

Burke plc is a renowned name in the mid-priced dining restaurant industry. The company, since its inception, has flourished by leaps and bounds and has been able to establish a chain of restaurants operating in various towns all across the UK. The company had been enjoying strengthen financial outlook in the prior years, but due to the increased competition and repercussions of the recession, the…

The financial statement prepared with the help of financial ratios is an aid to find out the efficient operation of the business for the share holders, competitors, and outsiders who are willing to invest in the firm. These ratios play a key role in calculating the dividend to shareholders, interest to debenture holders, as well as the tax payable to government. They also express the risk factor…

It is of great significance that the ratios must be benchmarked against a standard in order for them to possess a meaning. Keeping that into account, the comparison is usually conducted between companies portraying same business and financial risks, between industries and between different time periods of the same company.
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A Comparison of financial year 2012 with the financial year of 2011 presents that fact that the volume of sales in the retail industry in UK increased by 2.7 percent. Changes in reported retail sales between August 2011 and August 2012 standard reporting periods (by size of business) Pre-dominantly food Non-specialized pre-dominantly non-food Textile, clothing and footwear House-hold goods…

The Company conducts business in virtually all countries of the world with the primary focus on products related to human health and well-being. The paper presents the financial ratio analysis of Johnson & Johnson for the past three financial years and highlights its financial outlook. The ratios presents the company’s financial outlook is strengthened and is able to manage its finances…

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